AirAsia in talks to buy Airbus’ engineering firm

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It is seen as a positive development in the maintenance, repair and overhaul business of the aviation sector in Malaysia.

KUALA LUMPUR: The AirAsia Group is serious about entering the maintenance, repair and overhaul (MRO) business.

It is currently holding direct negotiations with Airbus Group SE to purchase its wholly owned Sepang Aircraft Engineering Sdn Bhd (SAE).

The deal is worth between USD14 million and USD20 million, people close to the talks told The Malaysian Reserve (TMR).

Analysts see this as a positive development for the MRO sector and the growth of the aviation-based industry in Malaysia.

AirAsia and Airbus are committed to formalising the purchase agreement by January 2017, according to the report.

SAE, an Airbus SAS subsidiary company and part of the Airbus Group, is European Aviation Safety Agency approved. It services commercial aircraft, engines and components.

If the deal materialises, AirAsia is expected to bring its fleet to SAE and also to service third-party carriers. Currently, AirAsia’s MRO activities are undertaken partly by SAE, Singapore and China.

“AirAsia’s volume would be enough for SAE to sustain financially, but third-party MRO is where the profit margin is captured,” sources told TMR.

An analyst told TMR there was a vacuum in the MRO market as Malaysia Airlines Bhd had yet to restart its MRO business while another local MRO player, Airod Sdn Bhd, was unable to bridge the gap.

“Slots are the most important aspect in MRO and completing the deal as soon as possible would create better business prospects for SAE and also help to pull foreign investments into this country through MRO spending.

“Malaysia can compete directly with China in attracting MRO, as labour and capital expenditure costs remain competitive unlike the rising costs seen in Singapore,” it quoted an expert as saying.

SAE was established in 2006, to provide Airbus aircraft support services in the South-East Asia region. Based near Kuala Lumpur International Airport, SAE’s 17,000 sq m purpose-built hangar is able to accommodate up to four Airbus A320 series aircraft, four ATR 42/72 series or two A330/340 series aircraft, according to TMR.